Aggregate efficiency and interregional equity

Abstract

The potential conflict between aggregate efficiency and interregional equity is perhaps the most crucial dilemma in regional economics and a major obstacle in the way of effective implementation of regional policies. The aims of this chapter are to identify cases where this conflict exists, to elaborate on the nature of the trade-off, and to offer suggestions for regional policy that help to minimize its effects. However, efficiency and spatial equity are sometimes compatible, and the paper will also examine these cases.